What is the accounting treatment of a long term liability when I make periodic re-payments that include an interest and principal portion that reduce the liability?
As an example lets say I purchase a vehicle on loan for 50000. I record an asset and liability amount of 50000 in the balance sheet. In the first month I make a loan re-payment of 1000 of which 400 is interest (which I record as an expense in the income statement) and 600 principal repayment. How do I account for the principal payment ie. what are the journal entries?
Re: Normally you use write checks, even if it is an online bi...
Hello sir. I have tried your suggestion. It seems obvious. However, in looking at the chart of accounts, it served to increase, not decrease, the long term liabilities and did not change the value of interest expense. I feel like I am going crazy. Don't know how I receive any answer that you may provide, so am providing my email address of [email address removed].